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Introduction
Opening a savings account can be a good way to safely hold some money whilst also earning interest on your deposits. Of course in the low interest rate environment of today it’s important to look around to find the best performing accounts.
Things to consider
– APY: Many people find that the best savings accounts are the ones that offer the highest annual percentage yield, or APY. APY refers to how much interest you earn on a deposit during a year, taking into account the effect of compounding interest. This is different from the interest rate, which does not take compounding into account. Though in the current environment expect this to be very small.
– Compounding Method: Compound interest is interest that’s paid on both the initial deposit and also on any interest earned. The more frequently interest compounds on an account, the faster your money can grow.
– Security: Many people consider the best savings accounts to be those that are most secure. Usually, savings accounts are considered low-risk, because you typically can’t lose money in the account. Equally it’s important to know if the financial institution providing the account is insured by the local government, and if so, up to how much.
– Customer Service: Choosing to open a savings account with a customer-friendly bank can be an important factor in deciding which account is best, in addition as more people move online, those accounts that are internet friendly are ever more important.
Summary
While we are in a relatively low interest rate environment it’s particularly important to review your current savings and investment arrangements to ensure that they are working for you and delivering you with the desired returns. It’s essential that you find a savings plan that suits your circumstances and helps to achieve your financial goals.
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